The Place of Fair Trade for International Financial Institutions

1. Introduction

The main tenet of globalisation is that in order to bring prosperity to every country, the barrier of each country’s economy (trade barrier to be exact) should be pulled out, so that the economy can grow faster. It is perceived that the greater flow of investments, goods and people will be, the better will go the economies. And since their trade barriers are gone (we can say a free trade regime), the countries are integrated into one single world market. Therefore the saying goes: “Integration to global market is good.”

This view is exercised from time to time, in a more loose concept from right after the Second World War and in a stronger imposition after the 1980s. We can see in history for the first in the creation of the unfortunate International Trade Organisation (ITO) and the General Agreements on Tariffs and Trades (GATT). While for the latter years, the world has been witnessing how two leading international financial institutions (IFIs), the World Bank and the International Monetary Funds (IMF), have been requiring their client governments to open their markets and integrate themselves to the global market as a condition for the much needed loans. In short, they should create a free trade regime in their own country.

It is no wonder then that critics of globalisation often centralise their themes of globalisation to free trade and the IFIs. The attacks were made even fiercer in the aftermath of a series of crisis: in Latin America, Russia, and Asia. The critics even have coined the mind-set embodying the free trade push as “Neoliberalism”. And the criticism was not only in intellectual circles, but also has became an outbreak of waves of mass demonstrations like in Seattle, November 1999. Two years later, the critics gained more footing: the global recession rightly before the September 11th attacks.